author version of article published as: ian murray, …the australian charities and not-for-profits...

Electronic copy available at: http://ssrn.com/abstract=2686419

1

AUTHOR VERSION OF ARTICLE PUBLISHED AS: IAN MURRAY, ‘THE

AUSTRALIAN CHARITIES AND NOT-FOR-PROFITS COMMISSION: REFORM

OR UN-REFORM?’ (2014) 17 CHARITY LAW & PRACTICE REVIEW 151-71

THIS VERSION TO BE CITED AS: IAN MURRAY, ‘THE AUSTRALIAN

CHARITIES AND NOT-FOR-PROFITS COMMISSION: REFORM OR UN-

REFORM?’ (2014) 17 CHARITY LAW & PRACTICE REVIEW 151-171; UWA

FACULTY OF LAW RESEARCH PAPER

THE AUSTRALIAN CHARITIES AND NOT-FOR-PROFITS COMMISSION:

REFORM OR UN-REFORM?

Ian Murray

After more than a decade of reviews and inquiries, in 2012 Australia finally adopted a

national regulator for the charity sector, the Australian Charities and Not-for-profits

Commission (ACNC). However, the change of federal government in Australia in 2013 has

seen a concerted effort from the new Coalition Government to eliminate the regulator,

abolish its supporting legislation and to fill the gap in a largely unspecified way, other than

through the creation of a Centre for Excellence. This paper builds on the discussion in Fiona

Martin’s earlier paper in this volume, by teasing out the Coalition’s plans to replace the

ACNC and examining in greater detail the practical problems such an attempt might involve

and might generate. It also expands on Martin’s critique of the reasons provided for

abolition. Given that much of the transitional cost has already been incurred, the paper

ultimately questions why the ACNC should not be left in place to enable the possibility of

longer-term benefits in the form of greater inter-jurisdictional regulatory harmonisation.

Introduction

Australia’s adoption of a national regulator for the charity sector, the Australian Charities and

Not-for-profits Commission (ACNC), took place after what can, as outlined by Martin, at

best, be described as a leisurely and thorough process of reviews and inquiries, dating at least

from the Charities Definition Inquiry of 2001. When leisure was replaced by haste under the

former federal government,1 the alacrity with which the ACNC was created inevitably

created some tensions over implementation and over settings at the micro-level. However, the

macro-level matters had largely been determined thanks to broadly consistent

recommendations (including the adoption of a national regulator/regulatory scheme) from the

various inquiries. Regardless, the change of federal government in Australia in 2013 has seen

a concerted effort from the new Coalition Government to eliminate the regulator, abolish its

supporting legislation and to fill the gap in a largely unspecified way, other than through the

creation of a Centre for Excellence.

This paper builds on Fiona Martin’s earlier paper in this volume,2 by teasing out the

Coalition’s plans to replace the ACNC and examining in greater detail the practical problems

that such an attempt might involve and might generate. With this understanding, the paper

Assistant Professor in the Faculty of Law, University of Western Australia and Consultant, Ashurst. 1 For a summary of the implemented and proposed reforms as at the date of the federal election (as well as

previous reviews and inquiries), see eg, Australian Charities and Not-for-profits Commission, ‘Not-for-profit

Reform and the Australian Government’ (Report, Australian Charities and Not-for-profits Commission, 1

September 2013). 2 F Martin, ‘Developments in Australian Charity Law: One Step Forward and Two Steps Backward’ (2014-15)

17 CL&PR 23.


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expands on Martin’s critique of the Coalition’s stated bases for ACNC abolition in order to

provide a holistic analysis of the net merit of the change. In doing so, it is important to recall

that the question of the appropriate balance between ensuring public trust and confidence in

not-for-profits and ensuring that government intervention is not overly intrusive, is not a new

debate. The Statute of Elizabeth,3 the lodestone for the definition of ‘charity’, was a piece of

legislation providing for the appointment of Commissioners to investigate abuses of charities

and to make orders for their redress.

1. Context: Recent Reforms and the Coalition’s Philosophy for the Not-for-profit

Sector

The creation of a national regulator formed a part of a much broader Australian not-for-profit

reform agenda which incorporated a range of regulatory, administrative architecture and more

substantive legal form and tax reforms. Martin has outlined the drivers for this reform process

and a number of the key reforms in her paper and they will not be repeated here. However, by

way of addition, it is pertinent that the overall reform agenda contained a range of

intergovernmental initiatives. The intergovernmental initiatives included matters like reform

of fundraising regulation across Australia, reviewing legal and reporting requirements under

grant agreements and considering the adoption, by the states and territories, of the

Commonwealth definition of ‘charity’. As discussed further below, the ACNC’s role as a

coordinating body is vital to such initiatives.

In addition, an understanding of the Coalition’s philosophy for the sector is instructive.

Before the 2013 election, then Shadow Minister for Families, Housing and Human Services

and now Minister for Social Services, Kevin Andrews, identified the following philosophies

as underpinning the Coalition’s policies in general and toward the not-for-profit sector3 in

particular:4

Government should ‘live within its means’.

Government should ‘back our nation’s strengths’.

The ‘nanny state’ should be ‘reverse[d]’, meaning that government should have a smaller

role.

The aim of ‘restor[ing] a culture of personal responsibility’, which appears linked to

reducing the role of government and increasing self-regulation.

These philosophies suggest limited appetite for additional regulation of the sector, which is

supported by the Coalition’s commitment to reduced government regulation via its broader

deregulation agenda.5 The philosophies also underpin Andrews’ goal that government ought

to be ‘enabling’ the not-for-profit sector, rather than ‘mastering’ not-for-profits.6

Purportedly in keeping with the Coalition’s emphasis on small government, enabling greater

freedom (and personal responsibility) for the not-for-profit sector, and on its broader

3 Statute of Charitable Uses (1601) 43 Eliz I, c. 4.

4 Kevin Andrews, ‘Empowering Civil Society: Major Policy Address: The Coalition’s Approach to the

Charitable Sector’ (Speech delivered at the Menzies Research Centre, Melbourne, 15 June 2012). 5 As to the broader deregulation agenda, see, eg, Arthur Sinodinos, Assistant Treasurer, ‘Plenary Address to the

Association of Financial Advisers’ (Speech delivered at the Association of Financial Advisers, National

Conference, Gold Coast, 13 October 2013). 6 Kevin Andrews, ‘Empowering Civil Society: Major Policy Address: The Coalition’s Approach to the

Charitable Sector’ (Speech delivered at the Menzies Research Centre, Melbourne, 15 June 2012) 5.


3

deregulation agenda, on 19 March 2014, the Coalition introduced the Australian Charities and

Not-for-profits Commission (Repeal) (No 1) Bill 2014 (Cth) (ACNC Repeal Bill). The Bill

provides for the abolition of the entire Australian Charities and Not-for-profits Commission

Act 2012 (Cth) (ACNC Act), hence the ACNC is to go, along with its regulatory regime,

rather than merely curtailing the powers of the ACNC or the obligations imposed on

registered charities, such as reporting and governance requirements.

2. The ACNC and its Functions

Martin has already described the ACNC and the goals of its regulatory framework of

supporting ‘public trust and confidence’ in not-for-profits; ‘support[ing] and sustain[ing]’ the

sector; and championing a decrease in ‘unnecessary regulatory obligations’.7 In summary, to

implement the framework, the ACNC:

determines charity status and registers these eligible entities;8

undertakes an educational role for registered charities;9

possesses a monitoring and enforcement function to ensure compliance by registered

charities where education is insufficient;10

maintains a public register, or portal, containing information on registered charities;11

and

is obliged to cooperate with other regulators and government agencies to reduce

regulatory duplication.12

As discussed by Martin, under the regime, registered charities must comply with record

keeping, reporting and notification requirements and also with broad governance standards.13

3. ‘Un-reform’ of the ACNC and its Implications

The ACNC Repeal Bill provides for the abolition of the entire ACNC Act, meaning the

ACNC along with its regulatory framework. What is puzzling, and as Martin describes,

productive of uncertainty, is that the Bill does not detail what the replacement arrangements

will be. The ACNC Repeal Bill does contain records and agency reporting transfer

provisions, but to an unidentified recipient agency to be determined by the relevant

Minister.14

The accompanying explanatory materials also refer to a proposed ‘Centre for

Excellence’, which is very generally described and appears focussed on self-help, rather than

self-regulation.15

Indeed, the wholesale abolition may be a matter of form rather than

7 ACNC Act s 15-5(1); Revised Explanatory Memorandum, Australian Charities and Not-for-profits

Commission Bill 2012 (Cth) and Australian Charities and Not-for-profits Commission (Consequential and

Transitional) Bill 2012 (Cth) (‘ACNC Revised Explanatory Memorandum’) 3-4. 8 ACNC Act s 15-5(2).

9 Ibid ss 15-5(2)(b)(iii), 110-10(1).

10 Ibid s 15-5(2)(b)(ii), ch 3, ch 4.

11 Ibid pt 2-2.

12 Ibid s 15-10(f).

13 Ibid ch 3, s 45-10(1); Australian Charities and Not-for-profits Commission Regulation 2013 (Cth) div 45.

14 ACNC Repeal Bill sch 1 pt 2.

15 Explanatory Memorandum to the ACNC Repeal Bill, Regulation Impact Statement, 3. See also

Commonwealth of Australia, Parliamentary Debates, House of Representatives, 19 March 2014, 2387 (Kevin

Andrews, Minister for Social Services).

4

substance as the elegantly brief ACNC Repeal Bill would, if enacted, not commence until a

further Act is passed which provides for the ‘arrangements [to] replac[e] the Commission’.16

This raises the question of what regime is intended to replace the ACNC and brings into

focus the notion of an ‘un-reform’ employed in the title of this article. In raising this

question, this part of the paper complements the analysis in Martin’s paper by teasing out,

where possible, the Coalition’s plans for any replacement arrangements and examining in

greater detail the practical problems that the attempted abolition might generate. Returning to

the concept of ‘un-reform’, the Coalition has indicated that in terms of determination of

charity status, reporting and governance oversight (ie monitoring and enforcement), its

favoured approach is to largely revert to the regulatory requirements in place immediately

prior to the ACNC, albeit with some unspecified or ambiguous adjustments.17

As discussed

below, the creation of a new sector proponent in the Centre for Excellence and the potential

archiving of the public register/information portal, coupled with a requirement for charities to

self-report on their own websites, appear to be the only key measures that the Coalition

intends to implement or retain.

3.1. Determination of charity status

The creation of the ACNC represented a fundamental shift at the federal level in terms of

determining charity status, including resolution of whether an entity comes within certain

charity sub-types,18

such as a public benevolent institution. As discussed by Martin,

previously, the Australian Taxation Office (ATO) had the predominant role at the federal

level as gatekeeper to charity status for the purpose of accessing tax concessions. However,

other federal regulators and government agencies also made separate determinations for a

variety of purposes, such as reduced annual review fees for incorporated charities regulated

by the chief corporate regulator, the Australian Securities and Investments Commission

(ASIC).19

The ACNC has, largely, resulted in a unified and coordinated determination

mechanism at the federal level and also created the potential for the Australian states and

territories to align their own definitions and, more significantly - administrative

determination, of charity status or charity sub-type.20

Martin elaborates on the constitutional

reasons for and the mind-boggling array of legislation and government agencies that may

apply, across jurisdictions, to a single charity. It suffices for the purposes of this article to

note that in 2011 the Scoping Study for a National Not-for-profit Regulator identified over

178 pieces of legislation across all levels of government in Australia, which required 19

separate government bodies to determine charity status.21

16

Explanatory Memorandum to the ACNC Repeal Bill 1. 17

Explanatory Memorandum to the ACNC Repeal Bill, Regulation Impact Statement, 3; Department of Social

Services (Cth), ‘Australia’s Charities and Not-for-profits: Options for Replacement Arrangements Following the

Abolition of the Australian Charities and Not-for-profits Commission’ (Options Paper, July 2014) 4-8. See also


Andrews, Minister for Social Services); Kevin Andrews, Minister for Social Services, ‘ACNC Must Go to Free

Up Red Tape’ (Media Release, 19 March 2014). 18

As to charity sub-types, see ACNC Act s 25-5(5). 19

See, eg, The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Final Report, April

2011) 27-8; The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Consultation Paper,

January 2011) 7. In relation to the range of regulatory regimes applying to charities in Australia, see, eg, G E

Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) ch 17. 20

As to separate administration at the state and territory level, see, eg, The Treasury (Cth), ‘Scoping Study for a

National Not-for-profit Regulator’ (Final Report, April 2011) 27-8. 21

The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Consultation Paper, January

2011) 7, 26.

5

Accordingly, the abolition of the ACNC and a return to pre-existing regulatory arrangements

would reintroduce the Commissioner of Taxation at the federal level as the de facto, but not

sole, decision maker for charitable status and the de facto regulator of the not-for-profit

sector, a move that is unlikely to be welcomed by the sector. Indeed, the need for an

independent regulator was a principle strongly supported by most participants in the

consultation process leading up to the formation of the ACNC,22

in part due to a ‘perceived

conflict of interest’ on the part of the ATO.23

This conflict of interest was recently reiterated

in an open letter to the Prime Minister by a range of not-for-profit sector representatives.24

Further, responses to a survey of the not-for-profit sector conducted shortly before the 2013

federal election clearly indicate a distinct aversion to ATO regulation (only 6% supported

ATO regulation) and a much stronger preference for either ACNC regulation (44%) or some

form of co-regulation (37%), involving a degree of self-regulation (the latter two, combined,

giving the 81% support for the ACNC referred to by Martin).25

As Martin also notes,

submissions to a senate inquiry into the ACNC Repeal Bill ‘overwhelming[ly]’ support

regulation involving the ACNC.

Minister Andrews has responded to these concerns in the past with relatively general

comments about considering mechanisms to split the regulatory function (for endorsement of

not-for-profits) from the remainder of the ATO's functions.26

A recent Department of Social

Services Options Paper27

puts some meat on these bones by suggesting that a ‘dedicated unit’

be established within the ATO to determine charitable status and satisfaction of tax

endorsement requirements.28

This does not seem vastly different to the previous arrangements

under which the ATO maintained a specialist Not-for-profit Centre. However, there is a

potential change in the proposal that objections to decisions would be considered either by an

independent panel (including non-ATO experts), or by an ATO panel comprised of officers

from a different section of the ATO. It is unclear how the second alternative materially differs

from existing ATO processes for independent review of objection applications, but the first is

22

Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into

the Australian Charities and Not-for-profits Commission Bill 2012; the Australian Charities and Not-for-profits

Commission (Consequential and Transitional) Bill 2012; and the Tax Laws Amendment (Special Conditions for

Not-for-profit Concessions) Bill 2012 (2012) 32 [2.90]-[2.91]. 23

The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Final Report, April 2011) 66.

See also Productivity Commission, ‘Contribution of the Not-for-Profit Sector’ (Research Report, 11 February

2010) 144 (citing submission received from Australian Women’s Health Network); Not-for-Profit Project Tax

Group, Regulating the Not-for-profit Sector Working Paper (July 2011) University of Melbourne

<http://www.law.unimelb.edu.au/files/dmfile/MicrosoftWord-RegulatingtheNot-for-

ProfitSectorWorkingPaperfinalversion2.pdf> 15. 24

Ann O’Connell et al, Open Letter to the Prime Minister: Civil Society Support for Independent Regulator

(Letter, 19 March 2014)

<http://www.communitycouncil.com.au/sites/default/files/Open%20letter%20to%20govt%200214.pdf>. 25

Pro Bono Australia, ‘Not for Profit Sector Election Survey’ (Research Survey Report, 15 August 2013) 6. A

more recent survey by Pro Bono Australia indicates that support for the ATO has remained steady at 6%, but

that support for the ACNC has increased: Pro Bono Australia, ‘2014 State of the Not-for-profit Sector Survey’

(Research Survey, September 2014) 25. 26

Kevin Andrews, ‘National Press Club Not-for-profit Sector Forum’ (Speech delivered at the National Press

Club Not-for-profit Sector Forum, Canberra, 23 August 2013). 27

As noted by O’Connell, the title is largely a misnomer as the Options Paper presents only one true (minor)

option, with the remainder of the paper seeking feedback on single proposals as to reporting, determination of

charitable status, proportionate compliance and transitional arrangements: Ann O’Connell, ‘The Ministry for

Funny Hats’, Pro Bono News (online), 10 July 2014

<http://www.probonoaustralia.com.au/news/2014/07/ministry-funny-hats>. 28

Department of Social Services (Cth), ‘Australia’s Charities and Not-for-profits: Options for Replacement

Arrangements Following the Abolition of the Australian Charities and Not-for-profits Commission’ (Options

Paper, July 2014) 6.

6

a genuine change and would appear to go some way toward addressing conflict of interest

perceptions. Of course, as the review relates solely to determination of charitable status, it

would not address such perceptions in regard to monitoring and enforcement action.

In addition, abolition would impede, but not eliminate, attempts to harmonise a definition of

charity (and of the various sub-types of charity) across Australian jurisdictions.29

However,

abolition does seem likely to annihilate the possibility of unified and harmonised

administration of such definitions. That is because it would entrench the previous position of

multiple regulators and decision makers at the federal level, as well as leaving in place the

various state and territory regulators and decision makers, without a clear body to act as the

champion of coordinated administration.

3.2. Monitoring and enforcement

The monitoring and enforcement function of the ACNC was intended to enable proportionate

regulation of registered charities, as distinguished from the ATO’s limited ability to respond

to regulatory infractions (effectively, an all or nothing response).30

In keeping with principles

of responsive regulation, the ACNC Act provides the ACNC with a spectrum of responses

where a registered charity fails to meet its obligations, or where it is more likely than not that

it will fail to do so in the future. The range of enforcement powers listed by Martin

demonstrates the breadth of the spectrum. As made clear by its ACNC Statement: Regulatory

Approach,31

the ACNC employs the regulatory principles of ‘Fairness, Accountability,

Independence, Integrity and Respect’ in determining its approach, with ‘Fairness’ involving

proportionate action on the part of the ACNC.32

The concept of ‘Fairness’ therefore envisages

the use of different compliance tools in different circumstances, depending on the seriousness

of the issue.33

Despite assertions to the contrary in the Department of Social Services Options

Paper,34

reverting to the ATO’s traditional monitoring and enforcement would mean the loss

of this proportionate regulation. That is because the ATO can generally only respond by not

acting, or by acting to revoke tax endorsement – an extreme measure that would not be

appropriate for many lesser breaches. This was one of the key reasons for the introduction of

the ACNC and from the perspective of regulatory theory, its abolition would significantly

impair the implementation of responsive regulation.

In addition, the pre-ACNC regime contained significant regulatory gaps, even if ATO

regulation is considered in conjunction with regulation based on:

legal form, such as that by ASIC (eg for companies limited by guarantee), or by state and

territory departments regulating incorporated associations, or state and territory

Attorneys-General (in relation to charitable trusts); or

29

As discussed by Martin, while Australia has recently introduced a statutory definition of charity at the federal

level (Charities Act 2013 (Cth)), it does not automatically apply at the state or territory level and the Coalition

Government has previously opposed the commencement of the legislation and appears to retain continuing

concerns. 30

See, eg, ACNC Revised Explanatory Memorandum 120; Ian Murray, ‘Fierce Extremes: Will Tax

Endorsement Stymie More Nuanced Enforcement by the Australian Charities and Not-for-profits Commission?’

(2013) 15(2) Journal of Australian Taxation 233, 246. 31

ACNC, ACNC Statement: Regulatory Approach (May 2013). 32

Ibid 5-6, 10. 33

Ibid 5. 34



Paper, July 2014) 8. Although the Options Paper uses some ambiguous language, it appears to suggest that the

ACNC’s Part 4.2 enforcement powers will not be transferred to the ATO.

7

to a lesser extent, on specific activities, such as state and territory regulation of

fundraising.

As identified in relation to financial reporting, many charitable trusts and some incorporated

associations may have had no reporting obligations, if not engaged in activities such as

fundraising, which rendered targeted enforcement action difficult. Further, in terms of

governance failures, it appears that enforcement actions or schemes to vary the internal

management of charitable trusts have not typically been actively pursued.35

This has been

ascribed to the high compliance and administration costs, as well as to the difficulty in

monitoring and establishing trustee breaches.36

Certain professional trustee companies are

themselves subject to additional regulation by ASIC,37

though this is to be distinguished from

the trusts that they administer and, in any event, they control approximately only half of total

charitable trust assets.38

Further, in the past, many religious organisations (depending on their legal form) and

unincorporated associations may not have been subject to any regulatory regime. While the

introduction of the ACNC did not represent as big a shift for basic religious charities due to

the range of concessions, significant numbers of unincorporated associations are registered

with the ACNC and subject to the new regime.39

The fact that the Coalition has identified the introduction of regulation for unregulated and

under-regulated charities as a reason for abolishing the ACNC (see part 4 below) strongly

suggests that removing the ACNC will re-introduce monitoring and enforcement gaps in the

form of non or under-regulation. The existence of these gaps means that the Coalition

Government is effectively relying on self-regulation, as expressly acknowledged in Minister

Andrews’ second reading speech.40

This poses serious challenges to good governance.41

In

particular, it provides opportunities for charities that do not want to comply and potentially

imposes a comparative disadvantage on better-intentioned charities.42

Further, as noted by

Valerie Braithwaite, the relevance of an enforcement framework to the regulation of not-for-

35

See, eg, The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Final Report, April

2011) 58; The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Consultation Paper,

January 2011) 10. 36

The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Consultation Paper, January

2011) 10. 37

A relatively select group of professional trustee companies (‘licenced trustee companies’) which are

prescribed by regulations to the Corporations Act 2001 (Cth) and which are required to hold an Australian

financial services licence for the provision of traditional services: Corporations Act 2001 (Cth) ch 5D. 38

Corporations and Markets Advisory Committee, ‘Administration of Charitable Trusts’ (Report, May 2013)

17. 39

The Explanatory Memorandum to the ACNC Repeal Bill claims a figure of 21,000 unincorporated

associations registered as charities with the ACNC: Regulation Impact Statement, 2. 40


Andrews, Minister for Social Services). 41

See, eg, Marina Nehme, ‘Regulation of the Not-for-profit Sector: Is Another Change Really Needed?’ (2014)

39(1) Alternative Law Journal 24, 25-6. 42

See, eg, ibid 25-6; Valerie Braithwate, ‘A Regulatory Approach for the Australian Charities and Not-for-

profit Commission: A Discussion Paper’ (Occasional Paper No 19, Regulatory Institutions Network, February

2013) 6; Not-for-Profit Project Tax Group, Regulating the Not-for-profit Sector Working Paper (July 2011)

University of Melbourne <http://www.law.unimelb.edu.au/files/dmfile/MicrosoftWord-RegulatingtheNot-for-

ProfitSectorWorkingPaperfinalversion2.pdf> 5.

8

profits, including charities, is heightened by the increased importance of ‘trust’ for the

sector.43

3.3. Reporting and dissemination of information

Compared with the previous arrangements, the ACNC notification and annual reporting

requirements significantly increased the depth and consistency of information gathered and

marked a drastic change in the dissemination of that information. For instance, all registered

charities are required to submit an Annual Information Statement (AIS),44

which initially

contains a range of operational questions and which will require financial, as well as non-

financial, information in future years. For the year ending 30 June 2013, the AIS contains 17

mandatory and 3 optional operational questions, with the AIS for future years slated to

include up to 15 additional financial questions, depending on charity size. Medium and large

registered entities (except basic religious charities) are also required to provide reviewed or

audited financial reports.45

Previously, many charitable trusts and Western Australian

incorporated associations may not have been subject to any mandatory financial reporting

(unless conducting fundraising or due to other specific legislation, such as the tax reporting

requirements for ancillary funds).46

Typically, charities in the form of unincorporated

associations and many religious charities formed by individual Act of Parliament or by letters

patent, were not subject to any regulatory regime, other than tax requirements, and hence not

required to report.47

As noted above, the level of information collected is highly relevant to

the effectiveness of monitoring and enforcement action. More fundamentally, dispersing the

information amongst a range of regulators (as was the case prior to the ACNC), would mean

the loss of a central repository for data on the sector – the patchy nature of which was

acknowledged in 2010 by the Australian Productivity Commission.48

Reduced and dispersed

information would therefore impact on the performance of the regulators.

Turning to dissemination of information to the public, the ACNC established a public register

containing much of the information collected, which provided the key information on a

charity in the one place for the first time and without imposing any access fee to that

information.49

At one stage it seemed that the Coalition was still considering whether to

retain a public charities register in some form.50

However, the Department of Social Services

Options Paper indicates that the register is to be archived and, instead, all (presumably

registered) charities will be obliged to have ‘a publicly accessible website that features’ the

43

Valerie Braithwate, ‘A Regulatory Approach for the Australian Charities and Not-for-profit Commission: A

Discussion Paper’ (Occasional Paper No 19, Regulatory Institutions Network, February 2013) 31. See also, Not-

for-Profit Project Tax Group, Regulating the Not-for-profit Sector Working Paper (July 2011) University of

Melbourne <http://www.law.unimelb.edu.au/files/dmfile/MicrosoftWord-RegulatingtheNot-for-

ProfitSectorWorkingPaperfinalversion2.pdf> 5. 44

ACNC Act s 60-5(1). 45

Ibid ss 60-10, 60-20, 60-60. 46

For a useful summary across jurisdictions and charity types, see eg, Australian Charities and Not-for-profits

Commission Implementation Taskforce, ‘Financial Reporting Stimulus Paper’ (Stimulus Paper, 20 October

2011) 3, Attachment A; Australian Charities and Not-for-profits Commission Implementation Taskforce,

‘Governance Reporting Stimulus Paper’ (Stimulus Paper, 20 October 2011) 3. For WA incorporated

associations, see Associations Incorporation Act 1987 (WA). 47

See, eg, The Treasury (Cth), ‘Scoping Study for a National Not-for-profit Regulator’ (Consultation Paper,

January 2011) 9. 48

Productivity Commission, ‘Contribution of the Not-for-Profit Sector’ (Research Report, January 2010). 49

As to access to charity information under the previous regimes, see, eg, The Treasury (Cth), ‘Scoping Study

for a National Not-for-profit Regulator’ (Consultation Paper, January 2011) 15. 50

Commonwealth of Australia, Parliamentary Debates, House of Representatives, 4 December 2013, 1561-2

(Kevin Andrews, Minister for Social Services).

9

identities of responsible person controllers, details of government funding and, subject to

numerous exceptions, financial statements.51

The direct compliance costs in money and time

for charities and the inefficiencies this would present for charities, regulators and donors

seem so obvious that it is difficult to understand why such an approach might be raised in

preference to the inclusion of the same information on the existing public register.

In any event, even if the register does continue to exist and responsibility is transferred to

another regulatory agency, such as the ATO, abolition of the ACNC would be likely to

significantly curtail the level of information maintained on the register. Over time, register

entries would be more likely to resemble Australian Business Register records, with details of

a registered charity’s name, charity type, legal form and tax endorsements, but52

likely not

including information about the charity controllers, places of operation, beneficiaries,

financial and other matters. Some, but by no means all, of this additional information would

be collected by other regulators, such as ASIC, in relation to companies limited by guarantee,

and by state and territory agencies in relation to incorporated associations. In this context, it

is worth noting that independent charity evaluation websites, which have been suggested by

Minister Andrews as an alternative means to a national regulator of achieving transparency,53

such as ‘Charity Navigator’ and ‘GuideStar’ must base their evaluations on data collected by

someone and, in the US context, this is detailed data submitted by charities to the Internal

Revenue Service.54

Accordingly, reverting to previous arrangements for reporting and disclosure would eliminate

a broad and timely source of information for regulators, researchers, donors and potential

recipients of benefits. It may also reduce compliance costs for a range of registered charities

that are not required to report to other regulators, although this saving will be ameliorated for

some by the proposed obligation to create and maintain a public website.

3.4. Sector proponent/deregulation champion

The creation of the ACNC as endowed with the objective of championing a reduction in the

sector’s regulatory burden, where appropriate, means that there is now a coordinating body

focussed on not-for-profit sector deregulation as a core, rather than a peripheral issue. This is

a key role, as significant regulatory complexity and duplication is due to lack of

harmonisation between state or territory requirements and federal requirements, and due to

lack of consistency for charities operating in multiple states and territories.55

While closing

the ACNC may eliminate some regulatory obligations, it also has the potential to remove the

drive for a broader improvement in the regulatory environment for charities, both amongst

federal agencies and regulators and between the different jurisdictions. Nevertheless,

although there have been some suggestions in Australian Senate Committee hearings that

there is no longer a focus on Commonwealth and state/territory cooperation in not-for-profit

51



Paper, July 2014) 4. 52

Based on existing tax endorsement application forms. 53

Freyla Ferguson, ‘“Charity Navigator” Model Tipped to Replace ACNC’, Pro Bono Australia News (online),

29 January 2014 <http://www.probonoaustralia.com.au/news/2014/01/‘charity-navigator’-model-tipped-replace-

acnc>. 54

See, eg, Krystian Seibert, ‘Testing the Case Against Independent Charities Regulation’ Pro Bono Australia

News (online), 20 February 2014 <http://www.probonoaustralia.com.au/print/news/2014/02/testing-case-

against-independent-charities-regulation>. 55

See, eg, Productivity Commission, ‘Contribution of the Not-for-Profit Sector’ (Research Report, January

2010) 114, 124-6.

10

regulation,56

the Coalition has previously indicated its intention to persist in attaining

harmonisation of certain areas of regulation, such as fundraising,57

and in working with the

states and territories to implement more streamlined reporting.58

Nevertheless, the removal, in

the most recent federal budget, of funding for a key intergovernmental committee that

monitored intergovernmental reform such as fundraising reform, the Council of Australian

Governments Reform Council,59

suggests that the process will be slow.

If one asks who will coordinate and facilitate such reform discussions, Andrews initially

indicated that the proposed Centre for Excellence would maintain a role liaising with the

Commonwealth, states and territories to achieve harmonised financial and non-financial

reporting standards.60

The Centre for Excellence, now Civil Society National Centre for

Excellence, has only been sketched in general terms, but it appears that it will be ‘small’ in

size and will focus on ‘advocacy’, ‘innovation’ and ‘collaborative education, training and

development’, as well as a reduction in ‘red tape’ for the sector.61

It appears that the

overarching goal of the Centre is to ‘build the capacity of civil society organisations’.62

However, as the Mid Project Report on potential models for the Centre demonstrates, the

consultation process is expressly intended to determine the scope of the Centre (by

identifying a meaning for ‘civil society’), its roles and activities, its purpose and desired

outcomes, its legal form and its funding sources.63

The four interim models proposed range

from a focus on strengthening relationships between people in communities, to a focus on

charities and other not-for-profit organisations. In short, no-one yet knows what the Centre is

and what it will do.

In this context, it appears likely that the Centre will have some roles that are additional to the

education function of the ACNC. Further, if the ACNC does cease to exist, it may be that its

deregulation champion function could be continued to some extent by the Centre. However,

56

Parliament of Australia Evidence to Senate Community Affairs Committee Canberra, 27 February 2014. 57

Kevin Andrews, ‘Civil Society and the Role of Government’ (Speech delivered at the Centre for Independent

Studies, Sydney, 23 April 2013) <http://kevinandrews.com.au/media/public-speech/civil-society-and-the-role-

of-government>. 58

Kevin Andrews, ‘The Role of Civil Society’ (Speech delivered at the Association Forum, Sydney, 18 July

2013) <http://kevinandrews.com.au/media/public-speech/the-role-of-civil-society-association-forum-sydney>. 59

Commonwealth of Australia, Budget Measures 2014-15: Budget Paper No 2 (2014) 187. 60

See, eg, Kevin Andrews, ‘Civil Society and the Role of Government’ (Speech delivered at the Centre for

Independent Studies, Sydney, 23 April 2013) <http://kevinandrews.com.au/media/public-speech/civil-society-

and-the-role-of-government>; Kevin Andrews, ‘Empowering Civil Society: Major Policy Address: The

Coalition’s Approach to the Charitable Sector’ (Speech delivered at the Menzies Research Centre, Melbourne,

15 June 2012) 7. 61

Department of Social Services (Cth), Civil Society National Centre for Excellence Research and Consultation

(12 June 2014) <http://www.dss.gov.au/about-the-department/news/2014/civil-society-national-centre-for-

excellence-research-and-consultation>; Kevin Andrews, ‘Address to Australian Institute of Company Directors’

(Speech delivered at the Australian Institute of Company Directors: NFP Directors Lunch, Melbourne, 29

January 2014); Kevin Andrews, ‘The Role of Civil Society’ (Speech delivered at the Association Forum,

Sydney, 18 July 2013) <http://kevinandrews.com.au/media/public-speech/the-role-of-civil-society-association-

forum-sydney>. 62

Department of Social Services (Cth), Civil Society National Centre for Excellence Research and Consultation

(12 June 2014) <http://www.dss.gov.au/about-the-department/news/2014/civil-society-national-centre-for-

excellence-research-and-consultation>. 63

Centre for Social Impact, ‘Civil Society National Centre for Excellence Consultation and Engagement: Draft

Models for Consultation’ (Mid Project Report, 21 July 2014) (the Centre for Social Impact was engaged by the

Department of Social Services to undertake consultation and development work on a model for the Centre for

Excellence).

11

replacing a widely respected,64

operating, regulator with a new body that, at least initially,

seems likely to lack a clear mandate, raises some risks for not-for-profit sector engagement in

the process. Nevertheless, the paucity of detail on the Centre, makes it difficult to say much

more at this stage.

4. Critiquing the Proposed Bases for ACNC Abolition

Despite the Coalition’s intentions and the recent Australian Senate committee report

recommending abolition,65

it is by no means certain that the ACNC Repeal Bill will be

enacted. For a start, as noted by Martin, despite the report’s recommendation, the

submissions to the committee were generally supportive of the ACNC and of the view that

the ACNC has the potential to reduce regulatory duplication and compliance costs. More

fundamentally, however, there are some serious questions about the chief ‘problems’ with the

ACNC regime identified in the Explanatory Memorandum to the ACNC Repeal Bill. It

appears that the supposed problems are:

The introduction of regulatory oversight for previously unregulated (eg unincorporated

associations) or under-regulated charities (such as charitable trusts).66

The creation of regulatory duplication for more actively regulated entities (such as

incorporated associations).67

That the ACNC has failed to meet its objective of reducing the regulatory burden

(especially in relation to the achievement of a ‘single reporting point for charities’)

because, on balance, it has added to the level of regulation.68

These ‘problems’ are examined below to critique the legitimacy of the proposed ‘un-reform’.

4.1. New regulatory oversight for previously un- or under-regulated entities

As identified in Parts 3.2 and 3.3 above, the ACNC regime has resulted in regulatory

oversight and reporting obligations for a variety of charities which were not previously

subject to effective regulatory control and which were not required to prepare and/or lodge

annual information statements – especially charitable trusts and unincorporated associations.

However, by labelling this a problem, the implication, indeed the express contention,69

is that

such regulation and reporting is ‘unnecessary’.

The previous approach consisted of ad hoc regulation depending largely on matters such as

legal form, jurisdiction of creation, or, for contractually enforced standards, funding source;

64

The most recent survey conducted indicates that 60% of respondents preferred the ACNC as a regulator to the

ATO or to self- or co-regulation: Pro Bono Australia, ‘2014 State of the Not-for-profit Sector Survey’ (Research

Survey, September 2014) 25. The 60% figure is a significant increase from the 2013 election survey referred to

at above n 25. In addition, 82% of respondents considered that the ACNC was ‘important/very important in

developing a thriving Not for Profit sector’: at 25. See also, Ann O’Connell et al, Open Letter to the Prime

Minister: Civil Society Support for Independent Regulator (Letter, 19 March 2014)

<http://www.communitycouncil.com.au/sites/default/files/Open%20letter%20to%20govt%200214.pdf>. 65

Senate Economics Legislation Committee, Parliament of Australia, Australian Charities and Not-for-profits

Commission (Repeal) (No 1) Bill 2014 [Provisions] (June 2014) 29 [2.88]-[2.89]. 66

Explanatory Memorandum to the ACNC Repeal Bill, Regulation Impact Statement, 2. 67

Ibid. 68

Ibid 2-3. 69

Ibid 2; Commonwealth of Australia, Parliamentary Debates, House of Representatives, 19 March 2014, 2386

(Kevin Andrews, Minister for Social Services).

12

and only to a lesser extent or indirectly on matters such as the charity’s purpose and

activities, the size of the entity and its previous compliance history. This does not generally

reflect the ‘risk-based approach’ to which the Explanatory Memorandum aspires. There is a

justification for a risk-based exclusion of some unincorporated associations, as the evidence

indicates that they tend to be relatively small in economic terms.70

However, such an

exclusion could be more directly linked to economic size, than using legal form, and is

already reflected to some extent by the ACNC’s tiered reporting requirements. Further,

Australian charitable trusts were estimated to hold assets of around $7 billion in 2013,71

so it

does not appear possible to collectively exclude them on a risk basis from effective

regulation.

More fundamentally, from the broader perspective of regulatory theory, as discussed in Part

3.2, reliance on self-regulation for these entities raises significant governance risks stemming

from the minority of charities that will inevitably manipulate the situation and from the flow-

on effects to other charities. Further, the ‘problem’ appears to have been framed from a

dichotomous perspective of ‘regulated’ or ‘unregulated’, rather than acknowledging that

various degrees of co-regulation are also possible, and that they may be of relevance to

charities.72

Finally, a preference for a ‘risk-based’ approach fails to identify the regulatory

goals that the approach is intended to achieve, nor to explain why different goals have,

presumably, been selected for different legal forms of charities.

In addition, failing to collect data, including financial data, on significant sections of the not-

for-profit sector will make enforcement, as well as informed analysis and evidence-based

policy, very difficult to achieve. Also, the data that is collected may be housed in a vast array

of disparate state/territory and federal agencies, along with individual charity websites.

4.2. Regulatory duplication?

The claim in relation to more actively regulated charities is that the ACNC regime has

resulted in duplicated regulatory requirements, such as reporting and governance obligations.

This concern has been raised in the context of incorporated associations, although it could

also be applied to Corporations Aboriginal and Torres Strait Islander Act 2006 (Cth)

corporations (Indigenous corporations) at the federal level. However, it should be noted that

for companies limited by guarantee, a number of the reporting and governance requirements

that are imposed under the Corporations Act 2001 (Cth) (and administered by ASIC) do not

apply where those companies are registered with the ACNC.73

Many incorporated associations and Indigenous corporations do potentially have two sets of

statutory reporting requirements and governance obligations, although, as identified in Part

3.3, reporting rules vary between jurisdictions. However, the ACNC has acted to reduce the

practical impact by accepting financial reports submitted to state or territory regulators in

place of the ACNC required financial reports for 2014 and has also entered into a

memorandum of understanding with the Office of the Registrar of Indigenous Corporations,

under which the ACNC will initially accept annual reports lodged by Indigenous corporations

70

Productivity Commission, ‘Contribution of the Not-for-Profit Sector’ (Research Report, January 2010) 57. 71

Corporations and Markets Advisory Committee, ‘Administration of Charitable Trusts’ (Report, May 2013)

17. 72

See, eg, Not-for-Profit Project Tax Group, Regulating the Not-for-profit Sector Working Paper (July 2011)

University of Melbourne <http://www.law.unimelb.edu.au/files/dmfile/MicrosoftWord-RegulatingtheNot-for-

ProfitSectorWorkingPaperfinalversion2.pdf> 4-5. 73

Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012 (Cth) sch 3

pt 3.

13

with the Office.74

These initiatives significantly diminish, but do not eliminate duplication.

More promisingly, however, South Australia and the Australian Capital Territory have

proposed the alignment of a number of aspects of their associations incorporation and

charitable fundraising regulatory regimes with that of the ACNC.75

While Martin notes that

only these two jurisdictions have done so, that is no small accomplishment in the short time

that the ACNC has been in existence, particularly given the uncertainty over its future for a

significant period of that existence.

In summary, this ‘problem’ has legitimacy, although it appears overstated. To the extent that

the ‘problem’ is attributed to the ACNC in relation to continued regulation by multiple

jurisdictions, as Martin discusses, the constitutional limits on the Commonwealth and, in turn,

the restrictions on the ACNC are the real causes, rather than the manner in which the ACNC

has operated. Further, while the impact on the affected entities should not be ignored, the

problem should also be seen in light of the discussion in Part 4.3 about the ACNC’s ability to

accomplish a net reduction in regulation.

4.3. Failure to achieve a net reduction in regulation

The introduction of the ACNC regime has resulted in instances of multiple regulators for the

same entity, including multiple (potentially overlapping) reporting requirements, as well as

partially superimposed governance obligations.76

Nevertheless, the criticism seems both

premature and too late.

It is too late in the sense that much of the initial consultation and compliance pain for

registered charities has already been incurred – although it is certainly not all wasted effort

whatever the outcome for the ACNC. Charities have been involved in extensive consultations

which resulted in the formation of the ACNC. They have, at least in theory, already reviewed

the ACNC regime and decided whether to opt into registration (since registration is

voluntary).77

Many have already confirmed their details for the purposes of the ACNC

register. Registered charities have already lodged their first AIS, with much of the

information able to be repeated in future years.78

Admittedly, the initial AIS did not require

financial information and this will be a significant change for registered charities which were

not previously subject to mandatory financial reporting, as discussed above. However, even

in this space, some registered charities that typically fell outside previous reporting regimes,

such as many basic religious charities and unincorporated associations, will either remain

exempt from having to provide financial information or reports, or will only have to provide

summary financial information due to their small size. Registered charities are also already

subject to the new governance standards discussed above and, in the author’s experience,

74

Australian Charities and Not-for-profits Commission, Red Tape Reduction (2014)

<http://www.acnc.gov.au/ACNC/About_ACNC/Redtape_redu/ACNC/Report/Red_tape.aspx>; Australian

Charities and Not-for-profits Commission ACNC Annual Report 2012-13 (2013) 60. 75

Department of Treasury and Finance (SA) ‘Not-for-profit Sector Reform’ (Fact Sheet, August 2013); David

Bradbury, Assistant Treasurer, Mark Butler, Minister for Social Inclusion and Andrew Barr, ACT Deputy Chief

Minister, ‘ACT Signs Up to New Charities Regulator’ (Joint Media Release, No 030, 11 March 2013). 76

For instance, the ACNC governance standards generally apply in addition to the governance obligations

imposed by legal form (with exceptions from legal form governance obligations for companies limited by

guarantee), or as a result of tax endorsements. 77

Charities that choose not to register miss out on federal government benefits, such as tax concessions. 78

Over 25,000 of 30,000 registered charities with a 31 March deadline have lodged AISs, with 20 per cent

voluntarily including financial statements: Australian Charities and Not-for-profits Commission, ‘Regulator

Thanks Charities’ (Media Release, 1 April 2014)

<http://www.acnc.gov.au/ACNC/Comms/Med_R/MR_072.aspx>.

14

many have taken at least some steps to confirm their degree of compliance and to update

systems to improve compliance.

In addition, given the ACNC has only been operating for a year and a half, the reproof also

seems premature. The ACNC has already created or had key involvement in a number of

processes to assist in longer-term regulatory reduction. For instance, by seeking feedback and

commissioning research to identify precisely what ‘red tape’ affects the not-for-profit sector,

including by way of the recent Red Tape in the Charity Sector online survey and the

December 2013 forum, Measuring and Reducing Red Tape in the Not-for-profit Sector.79

The ACNC has also established a range of department or sector-specific working groups and

projects to investigate targeted regulatory reduction, as well as co-chairing the whole of

federal government Removing Not-for-profit Regulatory Duplication Working Group and

participating in the inter-jurisdictional Council of Australian Governments Not-for-profit

Reform Working Group.80

Further, the ACNC has also instigated or enabled more substantive measures, such as the

reduction in duplicative reporting for incorporated associations and Indigenous corporations,

outlined in Part 4.2 above. While these examples merely alleviate additional compliance

obligations caused by the introduction of the ACNC, some measures do have real potential to

lead to a net decrease in duplicated reporting, from the position existing before the

commencement of the ACNC. For instance, the adoption of revised Commonwealth grant

guidelines that:81

preclude federal government departments from using grant conditions to obtain

information already collected by other federal agencies or regulators, like the ACNC; and

restrict the circumstances in which financial acquittal conditions can be imposed for

entities already lodging audited financial reports with the ACNC.

The procedural measures also hold significant promise in this respect. Moreover, even though

one of the key difficulties is that much of the regulatory overlap is between federal and

state/territory or local government bodies, as noted above, the existence of the ACNC has

already led South Australia and the Australian Capital Territory to propose alignment of their

associations incorporation and charitable fundraising regulatory regimes with the ACNC

regime. In addition, the majority of the not-for-profit sector is very supportive of the

continued existence of the ACNC and of its potential to drive a net decrease in regulation.82

Accordingly, as much of the additional ACNC regulation has already been implemented and

the short-term costs incurred, it makes no sense to abolish the ACNC before it has had a

reasonable opportunity to explore the possibility of securing longer term rewards, in the form

of more harmonised regulation. This point is supported by the fact that any regulatory

reversion from the ACNC to the ATO (and other regulators) will require some transitional

arrangements, with associated compliance and administration costs. This further round of

costs is likely to be augmented if abolishing the ACNC will not mean returning to the

79

Australian Charities and Not-for-profits Commission, Red Tape Reduction (2014)

<http://www.acnc.gov.au/ACNC/About_ACNC/Redtape_redu/ACNC/Report/Red_tape.aspx>. 80

Australian Charities and Not-for-profits Commission ACNC Annual Report 2012-13 (2013) 56-62. 81

Department of Finance and Deregulation (Cth), Commonwealth Grant Guidelines (2nd

ed, 2013) 25 [4.7]. 82

Ann O’Connell et al, Open Letter to the Prime Minister: Civil Society Support for Independent Regulator

(Letter, 19 March 2014)

<http://www.communitycouncil.com.au/sites/default/files/Open%20letter%20to%20govt%200214.pdf>; Pro

Bono Australia, ‘Not for Profit Sector Election Survey’ (Research Survey Report, 15 August 2013) 5.

15

regulatory position in precisely the same form as it existed immediately before the

commencement of the ACNC. This is likely to be the case, since the Coalition is

contemplating making at least some changes.

4.4. Change to the form of the amendments?

The discussion in Part 3 of the implications of reform and in this Part 4 of the grounds for

abolition of the ACNC, suggests that it will not be easy for the Coalition to simply abolish the

regulator. Indeed, further consultations have recently taken place on the form of

arrangements to replace the ACNC, albeit that the relevant Department of Social Services

Options Paper resolutely presses for the ACNC’s abolition.83

That the government is seeking

further feedback, indicates some aspects of the ACNC regime may survive. Moreover, the

unpalatable single option presented for reporting (the maintenance of an individual website

by all charities) and the expressed desire for a ‘proportionate compliance framework’ bolster

the likelihood of at least a limited survival.

Conclusion

The proposed ‘un-reform’ of abolishing the ACNC and reverting to a state of affairs

approximating the previous arrangements would likely reinstate the ATO as the default (but

not sole) federal decision maker for charitable status and regulator for charities and would

recreate perceptions of a conflict of interest. Such a change appears very likely to annihilate

the possibility of unified and harmonised administration of the definition of ‘charity’. Due to

the ATO’s limited range of enforcement sanctions, it would also severely restrict

proportionate and hence responsive, regulation. Further, even if ATO regulation is viewed in

conjunction with regulation based on legal form or fundraising, significant regulatory gaps

will remain, especially for charitable trusts. This provides serious challenges to good

governance.

In addition, the fate of the ACNC public register is uncertain, although it appears increasingly

precarious. Even if the register remains in existence and responsibility is transferred to

another agency, such as the ATO, abolition of the ACNC would be likely to significantly

curtail the level of information maintained on the register and therefore a reduction in the

usefulness of the register over time. This would also make it difficult for non-government

entities along the lines of ‘Charity Navigator’ or ‘GuideStar’, to provide data equivalent to

the register. Ultimately this would be likely to mean the loss of a single source of free and

deep information for researchers, donors and potential recipients of benefits. Less

information collection would, however, create some compliance savings for charities,

especially for those that were not previously required to regularly report to a regulator.

There are significant detriments to abolishing the ACNC. This makes it surprising that the

reasons provided for the ‘un-reform’ are not more compelling. Fiona Martin has called for

closer scrutiny of these grounds in her paper in this volume. This article has conducted an

examination of the reasons and found that, of the three key problems identified, only the

complaint of regulatory duplication for charities actively regulated by other regulators (such

as many incorporated associations and Indigenous corporations) appears justified. However,

even this concern is overstated and must be considered in light of the ACNC’s potential to

drive the longer-term goal of a net reduction in regulation for charities. These longer-term

83



Paper, July 2014).

16

benefits provide a very strong justification for retaining the ACNC, or a scaled-back version

of the regulator. Charities have already dedicated resources to understanding and complying

with the new requirements. Why abolish the ACNC at this stage before seeing whether it will

have success? If the Coalition has genuine concerns, then why not introduce a statutory

requirement for a review of the ACNC’s operations after a sufficient time? In any event, if

the ACNC is to be abolished then it is hoped that the proposed Centre for Excellence might

adopt the ACNC’s coordinating and instigating role of championing a reduction in

unnecessary regulatory obligations.

Finally, there are significant political and administrative impediments to the termination of

the ACNC. The Coalition Government will not control both houses of parliament during this

term of government. Further, one of the first orders of business for the Coalition in 2013 was

to disband the Office for the Not-for-profit Sector, which was a coordinating body for not-

for-profit matters at the centre of government. This would appear to have reduced the Federal

Government’s capacity to unwind implemented reforms such as the ACNC. The two-stage

approach to the legislation to abolish the ACNC is testament to this reality, in that the ACNC

Repeal Bill does not commence until a subsequent piece of legislation is enacted containing

the details of the transitional and replacement arrangements. For the immediate future then, it

appears that Australia will continue to retain its charities regulator, but subject to the

uncertainty for staff and all members of the regulatory community and the broader not-for-

profit sector caused by the on-going threat of imminent demise.

author version of article published as: ian murray, …the australian charities and not-for-profits...

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